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16. S = $55, C (X=$60) = $10.35, T=2 years and volatility is 25%. The option is European and the stock does not pay a

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16. S = $55, C (X=$60) = $10.35, T=2 years and volatility is 25%. The option is European and the stock does not pay a dividend. What is the fair value of the risk-free interest rate? Explain. (C=call price, P=put price, S=stock price, X=exercise price, r=risk-free rate, T=maturity.)

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